A key component of the Apple Watch made by one of two suppliers
was found to be defective, prompting Apple Inc. to limit the
availability of the highly anticipated new product, according to
people familiar with the matter.

The part involved is the so-called taptic engine, designed by
Apple to produce the sensation of being tapped on the wrist. After
mass production began in February, reliability testing revealed
that some taptic engines supplied by AAC Technologies Holdings
Inc., of Shenzhen, China, started to break down over time, the
people familiar with the matter said. One of those people said
Apple scrapped some completed watches as a result.

Taptic engines produced by a second supplier, Japan’s Nidec Corp.,
didn’t experience the same problem, the people said. Apple has
moved nearly all of its production of the component to Nidec,
these people said, but it may take time for Nidec to increase its
production.

Recall that my first review unit had a bum taptic engine — it worked when I first started using it, but struck me as weak. By the end of the first day it wasn’t working at all, and Apple supplied me with a second watch the next day. I’ve also heard from at least one DF reader whose Apple Watch Sport had a non-functioning taptic engine (he got it replaced at his local Apple Store). So some of these have made it out of the factories and into the wild. But it certainly doesn’t seem to be a rampant problem in the field.

The closing paragraph of the Journal’s story is a bizarre jab:

The shortages highlight the potential downside of Apple’s lean
supply chain. Apple can produce massive quantities of products
with little waste and excess supply, but it can experience
shortages when a problem arises with a key part.

As a friend quipped to me by text, “So the potential downside of the most successful manufacturing system in history is that when they run out of parts they can’t make stuff.” The potential downside isn’t with Apple’s supply chain — it’s with Apple’s use of brand-new never-before-manufactured-at-scale components. It’s the inherent risk of any groundbreaking new product. What in the world is the Journal suggesting Apple should do differently?

Update: The WSJ report now contains a new third paragraph, which wasn’t there when it was first reported:

Apple doesn’t plan a recall, because there’s no indication that
Apple shipped any watches with the defective part to customers.